The Mercury News interview: Shigeru Miyamoto, head of game development, Nintendo

In this photo released by Nintendo, Legendary Nintendo video game designer Shigeru Miyamoto plays a guitar solo in 'Wii Music' using the Wii Remote during Nintendo's media briefing on the opening day of the E3 Media & Business Summit, Tuesday, July 15, 2008 in the Hollywood section of Los Angeles, Calif. (PRNewsFoto/Nintendo,AP photo/Nintendo, Bob Riha, Jr.)

As head of game development at Nintendo and a longtime employee of the video game company, he has created some of the industry's most iconic games and characters: "Donkey Kong," the "Mario Bros." series and the "Legend of Zelda" games. More recently, he has spearheaded development of Nintendo's popular Wii console, working on games such as "Wii Sports," "Wii Fit" and "Super Mario Galaxy" that have helped showcase the system's capabilities.

Nintendo has had a very successful run in recent years with its DS handheld and the Wii. But the company now faces some big challenges. The weak economy is depressing the market for games, and digital distribution of games is starting to reshape the industry. Chief rivals Sony and Microsoft are taking closer aim at the Wii with new types of controllers. Meanwhile, the new controller Nintendo is developing, dubbed the Vitality Sensor, is a pulse meter and it's unclear how the company will build compelling games around it.

We recently spoke with Miyamoto about these trends and how they are affecting game development. Here is an edited version of that interview.

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Q How do you see the recession affecting Nintendo and the game industry? Does it encourage you to release fewer titles or to keep titles baking longer until the economy improves?

AWell, obviously, the recession is bad for everybody and it does have impact in certain areas, but one of the things we look at when we look at entertainment is, if you want something bad enough, you're going to save your money for it, right? And if you're flush with cash but you don't want something, you're not going to use that cash.

We're really just concentrating on creating something that people want. I think that's one of Nintendo's strong points, that ability to focus on that next challenge.

And (we're) thinking of how a family spends their budgeted entertainment money. Rather than a dad going out and buying something that he wants, (we're) creating something that we can present to them as something the whole family will use.

Q How is digital distribution of games affecting the industry and game development?

A The hope for business departments always is how they can reduce costs. So if you look at digital distribution with the fact that you don't need money for packaging and things like that, it's great.

As a developer, it's not changing how much money you're bringing in; it really doesn't change what we're focused on. However, I think it creates a lot of opportunity for a lot of different developers. Personally, I'm one of those guys who, even if I have all the songs from iTunes, I want the CD as well. It's something that makes me — I feel more reassured with that physical media.

Entertainment is something that will not just become digital. If I look at Wii MotionPlus, this is something that you're not doing via digital distribution.

The thing for us is we really don't see the future of video games being merely confined to digital distribution or moving solely or even to a majority of our products being distributed that way.

Q What do you think about the effort by Sony and Microsoft to create their own natural motion controllers? To what extent are these new controllers from your rivals a threat to the Wii?

A I believe that any sort of changes to interface that allows people to get into games and enjoy games is a great trend.

One of the challenges is not just to create a natural controller, but how do you get it into the hands of the people? How do you do that cost effectively? And I think we've accomplished that.

We have sold millions of controllers at a good price point. And we have that delivery system successfully already implemented. For other companies starting from zero and trying to figure out how to get it out there at a decent price point is a big challenge.

Q I've learned that one should not be too skeptical of Nintendo, but many folks seem dubious about the new Vitality Sensor you are developing. How do you respond to that skepticism? And can you share anything about the types of games you are developing for it?

A Ideally we would have been able to talk about this in terms of the software implementation rather than just the sensor itself. I don't have any indication for you (of what we have in the works) other than to say that we have lots of very creative ideas.

We understand the challenge before us, and we have met these challenges in the past. We just ask that people have confidence in us.

Q Of the games that are coming out in the near future from Nintendo, what are you most excited about?

A I'm very excited about new ''Super Mario Brothers'' and ''Wii Sports Resort.'' But on a theme base, what I'm really excited about is that continued challenge to create things that gamers of all experiences can play.

Age: 56 Birthplace: Kyoto, Japan Position: Senior managing director and general manager of the entertainment analysis and development division at NintendoEducation: Degree from the Kanazawa College of Art in Ishikawa, JapanJob history: Has been with Nintendo since 1977, when he was hired as a staff artistAwards and honors: First inductee into the Academy of Interactive Arts and Sciences Hall of Fame (1998). Inaugural inductee, alongside Mario, the game character he created, into San Francisco"s Walk of Game (2005). One of the first video game creators knighted into France"s Order of Arts and Letters (2006). Lifetime Achievement Award from the International Game Developers Association (2007). Named one of Time magazine"s 100 most influential people (2007)